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Intraday trading is riskier than investing in the regular stock market. It is especially important for beginners to understand the basics of this type of trading in order to avoid losses. Individuals are advised to invest only the amount they can afford to lose without facing financial difficulties.
Read more about our Intraday Trading Strategies for Investors .
Tips for Intraday Trading
Below are some tips for intraday trading in the Indian stock market that will help investors make the right decision:
- Pick two or three liquid stocks
- Set entry and target price
- Using stop-loss for short effect
- Book your profits when you reach your goal
- Be a trader instead of an investor
- Research your wishlist thoroughly
- don't move against the market
- Basic rules for intraday trading
- intraday trading indicators
- How to make profit during intraday trading
- intraday time analysis
- how to select stocks for intraday trading
Pick two or three liquid stocks
Intraday trading includes open positions before the end of the trading session. This is why it is recommended to choose two or three large-cap stocks that are highly liquid. Investing in mid-sized or small-cap investors can hold these stocks because of their low trading volumes.
Set entry and target price
Before placing a buy order, you need to set your entry level and target price. It is common for a person's psychology to change after buying stocks. As a result, you can sell even if the price sees a slight increase. Due to this, you may lose the opportunity to avail higher profits due to price rise.
Using Stop-Loss for Lower Impact
Stop loss is a trigger that is used to automatically sell shares if the price falls below a specified threshold. This is beneficial in limiting potential losses for investors due to a fall in stock prices. For investors who have used short selling, the stop loss reduces the loss in case the price rises beyond their expectations. This intraday trading strategy ensures that emotions are eliminated from your decisions.
Book your profits when you reach your goal
Most day traders suffer from fear or greed. It is important for investors to not only cut their losses but also book their profits once the target price is reached. If the individual thinks that there is a further increase in the stock price, the stop loss trigger should be readjusted to match this expectation.
Be a trader instead of an investor
Intraday trading, as well as investing, requires individuals to buy shares. However, the factors for both these strategies are different. One type embraces the fundamentals while the other considers the technical details. It is common for day traders to take delivery of shares if the target price is not met. He then waits for the price to earn his money back. This is not recommended as the stock may not be a worthy investment, as it was bought only for a short period.
Research Your Wish List Thoroughly
Investors are advised to include eight to 10 stocks in their wish list and research them thoroughly. Knowing about corporate events, such as mergers, bonus dates, stock splits, dividend payments, etc., is important along with their technical level. Using the internet to find resistance and support levels would also be beneficial.
don't move against the market
Even experienced professionals with advanced tools are not able to predict market movements. There are times when all technical factors indicate a bull market; However, there may still be downsides. These factors are indicative only and do not provide any guarantees. If the market moves against your expectations, it is important to exit your position to avoid huge losses.
Stock returns can be huge; However, making small profits by following these intraday trading tips and strategies should be satisfactory. Intraday trading offers high leverage, which effectively provides decent returns in a day. Being content is the key to being successful as a day trader.
Rules for intraday trading
Most of the traders, especially the beginners, lose money in intraday trading due to the high volatility of the stock markets. Usually, losses are due to fear or greed because, while the investment is not risky, there is a lack of knowledge.
Basic rules for intraday trading
Most of the traders, especially the beginners, lose money in intraday trading due to the high volatility of the stock markets. Usually, losses are due to fear or greed because, while the investment is not risky, there is a lack of knowledge.
Below are some basic rules for trading in intraday:
- market timing
- Plan Investment Strategy and Stick to It
- exiting a position under unwanted conditions
- Invest in small amounts that won't pinch
- Research and choose liquid stocks
- Always close all open positions
- spend time
market timing:
Experts often recommend that individuals avoid trading during the first hour after the market opens. Taking a position between noon and 1 pm can increase your chances of making a profit.
Plan investment strategy and stick to it:
Every time users start trading, it is important for them to have a clear plan on how to do intraday trading. It is important to determine the entry and exit prices before starting a trade. One of the most important intraday trading tips is to use a stop loss trigger to minimize potential losses on your positions. Furthermore, once the stock achieves the target price, users are advised to close their positions, and not be greedy and expect higher profits.
Exiting a position under unwanted conditions:
For trades that provide profit and price-reversal (price expected to show reverse trend), it is prudent to book profits and exit open positions. Also, if the positions are not favorable, it is advisable to exit immediately and not wait for the stop-loss trigger to activate. This will help the traders to minimize their losses.
Invest in small amounts that won't pinch:
It is not uncommon for beginners to get carried away after making some profit during day trading. However, markets are volatile and forecasting trends is not easy even for experienced professionals. In such situations, beginners can easily lose all their investments. This is why an important intraday tip is to invest small amounts that the user can afford to lose. This will ensure that individuals do not face financial difficulties if the markets are not in their favour.
Research and choose liquid stocks:
Before starting intraday trading, it is recommended to understand the basics of the stock market , and fundamental and technical analysis. There is a lot of research available on the internet and it will be beneficial to take the time to read it. Furthermore, there are hundreds of stocks that are traded on the equity markets and traders should trade only two or three liquid stocks. Liquid stocks are those stocks which have high volumes in the intraday market. This allows traders to exit open positions before the end of the trading session.
Always close all open positions:
Some traders may be tempted to liquidate their positions if their targets are not achieved. This is one of the biggest errors and traders tend to book losses even though it is important to close all the open positions.
spend time:
Day trading is not for professionals who are employed in a full time job. Traders need to be able to monitor movements throughout the market session (from opening bell to closing it) to enable them to make the right calls as needed.
intraday trading indicator
When it comes to booking profits in intraday trading, you will need to do a lot of research. For the same purpose, you need to follow some indicators. Often considered the holy grail of intraday tips; However, this is not entirely accurate. Intraday trading indicators are beneficial tools when used with a comprehensive strategy to maximize returns.
how to make profit in intraday trading
Intraday traders always face the inherent risks that are present in the stock markets. Price volatility and daily volume are some of the factors that play a significant role in the stocks taken up for daily trading. To ensure proper risk management, traders should not risk more than two percent of their total trading capital on a single trade. So here are some tips are shared to make profit in intraday trading.
intraday time analysis
When it comes to intraday trading, daily charts are the most commonly used charts that represent price movements on intraday intervals. These charts are a popular intraday trading technique and help illustrate the movement of prices between the opening bell and the close of the daily trading session. There are many ways in which intraday trading charts can be used. Below are some of the most commonly used charts while trading intraday on the Indian stock market. Learn more about Intraday Trading Timing Analysis.
How to pick stocks for intraday trading
To be successful as a day trader, it is important to know how to pick stocks for intraday trading . Often people are unable to make profits because they fail to select suitable stocks to trade
Day trading, if not managed properly, can have drastic consequences on the financial well being of the users. The allure of making huge profits in a short period of time can entice traders. However, with incomplete understanding and knowledge, intraday trading can be harmful.
Volume are a couple of factors that affect the stocks picked for daily trading. Ideally, traders should not risk more than two percent of their total trading capital on a single trade to ensure proper risk management. However, the desire to earn high profits often compels traders to take on more risk. To balance the risk taken, while reaping higher returns, here are some tips to follow:
how to make profit in intraday trading
To make profits, here are some of the proven intraday trading strategies:
- Opening Range Breakout (ORB)
- Mapping Resistance and Support
- demand-supply imbalance
- Select 3:1 risk-reward ratio
- Relative Strength Index (RSI) and Average Directional Index (ADX)
Opening Range Breakout (ORB):
This intraday trading strategy is widely used by professional traders as well as amateurs. To maximize the potential of this strategy, combining it with optimal use of indicators, accurate assessment of market sentiment, and strict rules are recommended. ORB has many variations; Some traders may choose to trade on breakouts larger than the opening range and others may choose to place their trades on opening range breakouts. The time window for trades ranges between 30 minutes and three hours.
Mapping Resistance and Support:
The price of each stock fluctuates within a range, known as the opening range, from the beginning of the trading session for the first 30 minutes. The highest and lowest prices during this period are considered as resistance and support levels. It is advisable to buy when the stock price moves beyond the higher opening range and sell if the price falls below the lower opening range.
Demand-Supply Imbalance:
An important intraday trading tip for beginners is to look for stocks where rigid demand-supply imbalances exist and opt for these as entry points. Financial markets follow the general demand and supply rule—price goes down when there is no demand with high supply and vice versa. Users must learn to identify such points on price charts through research and studying historical movements.
3:1 Risk-Reward Ratio Select:
Traders, especially beginners, must understand the proper risk-reward ratio. Initially, finding stocks that offer a potential risk-reward ratio of at least 3:1 would be beneficial in earning profits in stock market investments. This strategy will allow them to lose small, while giving them the opportunity to earn big, even if they have losses on most of their trades.
Relative Strength Index (RSI) and Average Directional Index (ADX):
The combination of these two intraday trading strategies to find buy and sell opportunities can help traders make profits. RSI is a technical momentum indicator to determine the comparison of recent losses and gains on overbought and oversold stocks. ADX is beneficial and is used to determine when prices are showing strong trends. In most scenarios, if the RSI crosses the upper limit, it signals a sell trade and vice versa. However, when you combine RSI and ADX, intraday traders buy when RSI crosses the upper limit and vice versa. ADX is used as a trend identifier to help users make their buy or sell decisions.
Intraday trading involves trade settlements of the same day. Most traders try to make small profits through their trades. The golden intraday tip is to ride with the market trend to help make profits.
Angel One's Angel Eye features chart and portfolio watch tools that help identify trends, and thus help traders make better decisions. This will help traders to make profits from intraday trading.
Things You May Also Like to Know
Is intraday trading profitable?
Yes, but if you are a new trader, you must follow the basic intraday trading rules to avoid losses.
Profit from intraday trading depends on many factors, but most importantly, on the right selection of stocks with high liquidity. Modern stock market tools are sophisticated enough to help you plan the right entry moment. Third, opt for a stop loss to keep the loss at a marginal level.
Is intraday trading good for beginners?
It will take you some time to trade the market like a pro. But you can still turn a profit if you keep these simple tips in mind.
- take time to understand the market
- knowledge is power, so do your research
- Set aside a fund to infuse when needed
- starting small; Initially trading in one or two stocks
- Invest time tracking the market for the right opportunities
- Have a realistic view of profit
- Intraday trading takes place during the busiest hours in the market; Take your position after the market has been open for at least one hour
- Minimize your losses with limit orders. It allows trading with greater accuracy
- Build a strategy and stick to it
How intraday trading is different from regular trading?
Intraday trading rules involve buying and selling of shares on the same day. In this way, there is no transfer of ownership of the shares. The purchase of your shares gets offset by the sale.
In regular trading, the trade takes place over a period of time, which means the stocks get delivered to your demat account. And, when you sell, these stocks are taken out of your account.
Where to place intraday trades?
You need to partner with the right broker, who has expertise in helping intraday traders with proper research and technical support. Since intraday trading accounts involve a high volume of transactions, choose a trading account with a low brokerage and fast execution. One option is to open an intraday trading account with Angel Broking and get zero-cost equity delivery for a lifetime.
How can I make money from intraday?
Often intraday trading is introduced in the stock market as a way to earn quick money. This is true as traders seek to capitalize on price volatility in a swift, systematic manner. Remember, in intraday, you are closing your position before the market closes, and hence, you need to select stocks that have high volume and liquidity. Also, plan market entry and exit carefully and always put a stop loss to minimize the chances of loss.
When to execute intraday trades?
The best time to trade is when the market is most active, and there is a lot of price movement. Within 30 minutes of day trading, each stock forms a range. This is called the opening limit. Stock price above the opening range signals 'buy'. Similarly, a stock price below the opening range is a 'sell' signal.
What is the simplest intraday trading strategy?
Intraday traders profit from the volatility in the market, but they also follow the market trends for a period to plan their moves. Do not trade during the first hour of trading; At this time the market remains more volatile. Initiate the trade after getting a proper idea about the opening range.